Spending on holiday decorations can help retailers

This holiday season, the front lawn of the Milam family's Dallas home is transformed into a winter wonderland of miniature golf.

Visitors stop from nearly sunrise to sunset to admire Christmas decorations — and borrow a club to play a round of golf centered around Santa, candy canes, snowflakes, and more.

“You can see the excitement and amazement not only in the kids, but also in the adults,” said Mike Milam, a firefighter and father of two.

Decorating the front yard has become an annual tradition for the Milam family since the COVID pandemic. The family of four elaborate motifs is catching on trend with many retailers, including Home Depot and Walmarthas sought to capitalize on it in recent years: Some customers are turning to seasonal decor more, even as they watch how much they spend on other discretionary items.

Consumers are prioritizing decorations and experiences over gifts this holiday season, according to an annual holiday spending survey by consulting firm Deloitte. The survey found that respondents expected to spend slightly less on gifts this year, down about 3% year over year. But they plan to spend about 9% more on non-gift purchases, with most of that jump coming from holiday decorations.

Survey respondents said they planned to spend $181 on home-related items, furnishings and holiday decorations, up 22% year over year and nearly 60% more than the 2019 holiday season before the pandemic.

Holiday decor provides a boost to retailers, even those who love them goal, Dollar General and Dollar treeWhich noticed a decline in other categories.

Customers are “looking for ways to add a little seasonal decor,” which led to increased sales of accessories including frames, candles and vases in the latest quarter, Rick Gomez, Target's chief commercial officer, said on an earnings call in late November.

The retailer was pleased with customers' response to the “appreciative aspect of Halloween,” Dollar General CEO Todd Vassos said on the company's earnings call in early December. Shopper reactions to this seasonal decor have offered “some glimmer of hope” as the dollar store chain heads into the peak holiday season, he said.

However, holiday decoration sales may not be as fun as some companies would like.

For example, Chris Butler, CEO of the National Tree Company, said sales have been slower in the past two years. The New Jersey-based company, which sells online through retailers including Kohl's, Amazon, Macy's and Home Depot, expects sales to be flat year over year, he said.

About 70% of the company's sales typically come from artificial Christmas trees, but it also sells decorations such as wreaths and wreaths, Butler said.

Sales rose in 2020 and 2021 during the pandemic, when consumers had extra stimulus money to spend and more time at home, Butler said. He added that since then, 2022 and 2023 have witnessed “a decline for years because we have passed the big boom.”

Based on the company's research, consumers typically get a new artificial tree every five to six years. Pandemic purchasing patterns, and inflationary pressure on households, have extended this replacement period longer, he said.

“If you can try to make this tree last another year, consumers are more likely to do that rather than buy new trees,” Butler said.

Home Depot, a longtime seller of real and artificial Christmas trees, has pivoted more toward seasonal decor — especially after its 12-foot-tall skeleton, Skelly, became a sensation during the pandemic. It's selling an eight-foot-tall Santa and an eight-and-a-half-foot reindeer this year, along with a wide variety of other decorations like animated Disney characters.

Still, the home improvement retailer has struck a balance to attract customers looking to spend less for holiday cheer after rising inflation rates, said Lance Allen, chief home improvement retailer. She has purchased more artificial Christmas trees at lower prices, such as a pre-lit one that sells for $49, this holiday season than last, he said.

He added that “porch greeters” — plastic figurines like a little snowman or a golden doodle in a Santa hat — are also a more wallet-friendly choice at under $40.

Target's leaders have emphasized value, too, as they try to win over consumers who are more discerning about spending on wants rather than needs. The big-box retailer is also capitalizing on trends, such as pink Christmas decor, figurines for shelf landscapes, oversized arches for doorways and walls and nostalgic ceramic ornaments, spokesman Brian Harper Tibaldo said.

To increase sales, Walmart chased social media-fueled trends while trying to provide value. She debuted the six-foot-tall white nutcracker after noticing that customers were buying large, painted nutcrackers and redecorating them.

The nutcrackers sold out when they first went on sale last year, said Sheila Wiles, Walmart's lead merchandiser for holiday decor. Walmart has doubled its stock of them this year, but they are still about to sell out before Halloween.

Low-priced decor has also been a hit, with customers making their own wreaths with $1.98 red velvet bows and decorating their Christmas trees with 98-cent faux snowflakes instead of tinsel, she said.

Home Depot, Target and Walmart declined to share holiday decor sales numbers this season, or say whether the category is performing better than last year.

Although the Milam family created a wonderful holiday scene, they also wanted to find value along the way.

Instead of buying a lot of the decor, the Milam family made most of it. The family spent about $1,000 on front yard decorations to build the miniature golf course, Mike Milam said. Most of the supplies came from Home Depot, where he bought lumber, paint and other tools. Family of four – Mike; his wife Katie; Merrick's 12-year-old daughter; and his 10-year-old son, Nash — built putting holes together on nights and weekends starting in the fall.

This year, the family also purchased an eight-foot real Christmas tree from Home Depot for $129 and a festive plastic Christmas chicken for $20 on Amazon.

Most of the Milams' decor was recycled from years past, Mike Milam said. He said most families in his neighborhood put up the same decorations and inflatables in the yard as they did last year.

Mike Milam said he was “more conscientious” about spending this year. Food and electricity cost more than they used to. Additionally, as his children get older, they have more sporting activities which come at a high cost.

“Everything is a little more expensive,” he said.

Despite the cost of decorating, he plans to continue decorating his property — and he has plenty of other ideas in mind for the front yard. So far, the family has filled the front yard with themes including Nintendo's Super Mario game and Steven Spielberg's Christmas classic “E.T. the Extra-Terrestrial.”

As he spends more money and time on holiday decorations, he spends less on gifts for his children.

“I would rather have experiences than things,” he said.

Through these projects, he said, his children have become more helpful by learning how to paint, lay artificial turf and use a chainsaw. It has become a way for the whole family to create and bond.

“We probably have 12 to 15 years of ideas,” he said. “I will do it as long as I'm working and my kids are around and I want to be a part of it.”